India: Centre hints at changes in FTA policy, Companies Act
Times of India | Jun 15, 2014
Centre hints at changes in FTA policy, Companies Act
CHENNAI: Amid criticism from India Inc, the government on Saturday said it has initiated a review of the free trade agreements (FTAs) and the Companies Act, besides looking into the functioning of special economic zones, in what is being seen as pointers to possible changes to controversial decisions of the previous government.
"I have instructed the ministry to do a complete analysis of each of the FTAs, as not every FTA is seen completely beneficial to India," commerce and industry minister Nirmala Sitharaman told reporters at a news conference at the BJP headquarters here. "The ministry will come out with a report on it soon. It has to happen in a fortnight," she said.
Similarly, on the Companies Act, she said the government planned a major consultative meet on June 21 with all stakeholders to discuss provisions of the new law, as charted accountants, cost accountants, company secretaries and industry bodies had expressed concerns. "I don’t care during which regime these things came in," the minister said adding the government was committed to facilitate a smooth business environment. Industry has complained about the 2% spend on corporate social responsibility, appointment and tenure of directors and several other provisions of the new law.
She also said the commerce ministry had been directed to look into each SEZ to understand why they could not perform well. "We want to know the difficulties. Why they are not vibrant and why some are grounded? There is a complete review of SEZs happening," she said, while rejecting criticism that the Centre was reviewing each and every decision of the previous UPA regime.
The SEZs, which were launched during the Atal Bihari Vajpayee government, remained a key policy weapon of UPA as well, which enacted a law offering several concessions and tax benefits to boost manufacturing and exports, only to withdraw the incentives when Pranab Mukherjee was finance minister. The commerce department has suggested that some of the tax concessions should be restored so that manufacturing comes back to Indian shores.
Indian industry is also critical of the free trade agreements, and has blamed zero or low duty imports from the Asean countries as well as South Korea and Japan for multinationals going slow on investments in India. While India will go back on back on its existing commitments, FTAs in the pipeline are expected to see some tough negotiations.
While former Prime Minister Manmohan Singh, along with then commerce minister Anand Sharma and deputy chairman planning Commission Montek Singh Ahluwalia drove the FTA agenda, even he UPA was divided on the issue. On November 6, TOI was the first to report that P Chidamabram, UPA’s finance minister had cautioned that the government should not rush into bilateral trade deals. Earlier, Congress president Sonia Gandhi and Kerala veteran AK Antony had also raised concerns over the Asean agreement.
In April 2013, BJP had demanded that UPA should desist from negotiating a trade agreement with the European Union amid concerns from the auto industry. "All treaties which impinge upon the sovereignty of the country and the fundamental rights of the people including food security and health, and the federal structure of the country should be ratified after the scrutiny of the Parliament," party leader Murli Manohar Joshi had said in a statement.
